Together with businessman Max Rose and trade representative Friedrich Wilhelm Esslinger Karl Benz founded the Benz & Co. Rheinische Gasmotoren-Fabrik (called Benz & Cie. after 1899) as a public incorporated corporation.
The number of company employees grew rapidly to 25 and licences for building gas engines were issued. Financially secure, Benz could now focus all his energy on car engine development. To do so he began with the design of an all-encompassing vehicle in which to integrate his four-stroke petrol engine. His competitor Daimler on the other hand integrated his first engine in a carriage. In 1886, Karl Benz was granted a patent for his vehicle and presented the first "Benz Patent-Motorwagen" (Benz Patent Motor Car) to the public.
Three versions of the three-wheeled vehicle were produced between 1885 and 1887: model no. 1 was presented by Benz to the German Museum in 1906; model no. 2 is assumed to have been modified and reconstructed several times; and model no. 3, which featured wooden-spoke wheels, was driven by Bertha Benz on the first long-distance automobile trip in 1888.
Growing demand for stationary engines enabled Benz & Co. Rheinische Gasmotoren-Fabrik to move to a larger production facility. Following the arrival of new partners, Friedrich von Fischer and Julius Ganß, in 1890, the Rheinische Gasmotoren-Fabrik advanced to the status of second-largest engine manufacturer in Germany. In 1893, Karl Benz introduced axle-pivot steering to the automotive industry. He also developed the "contra" engine, the forerunner to today's boxer engine, in 1896.